- The gold market has shown itself to be initially bullish but then gave back quite a bit of the gains and is starting to roll over into negativity as the $4,200 level offers a massive amount of resistance.
- I think at this point in time, it's not so much that the $4200 level is a major barrier. I think it has more to do with the fact that we're just overdone.
- So, with that being said, I think it makes a certain amount of sense that any drop from here is probably something that will be akin to an opportunity to buy at cheaper prices. And we'll just have to wait and see whether or not that presents itself. A drop in a bounce is what I'm looking for. And I would love to see it at the $4,000 level.
On the Other Hand…
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The alternate scenario is that we break above $4,200 and just simply continue to go higher. With this being the case, think you've got a situation where traders are looking at this through the prism of a market that is very bullish, but sooner or later, we do need to see some type of gravity take place.
With this, think the market I believe it is better off pulling back in order to offer some value because when you look all the way back to the 20th of August, there's only a handful of red candlesticks and there's only one of any size. So, this has been a runaway train. Eventually people want to cash out and take the profit home. Eventually traders start to look at that. It's a little too high and they want to at least try to short it. They probably won't have much success as central banks around the world continue to hoard gold.
We have a lot of economic factors out there pushing around as well. So, I remain bullish. I just want to see some type of value brought back into the picture before I start deploying more capital.
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